Select Committee on Trade and Industry Annxes to the Report

Follow-up Questions


The Committee would be assisted by an indication of the steps taken to ensure that the greater transparency referred to by the Committee and in the Government's response has in fact come about, in particular in the 1999-2000 Post Office Accounts, and in respect of the reserved and non-reserved areas

  Under Article 14 of the European Postal Directive 97/67/EC, all universal service providers including the Post Office are required to prepare internal accounts for each of the services within the reserved sector on the one hand and for the non-reserved sector on the other. The accounts for the non-reserved services should clearly distinguish between services which are part of the universal services, and services which are not. Such internal accounting systems shall operate on the basis of consistently applied and objectively justifiable cost accounting principles. The Post Office is required, on request, to provide detailed accounting information to the regulator and to the European Commission.

  Under Article 15 of the same Directive the Post Office is required to draw up financial accounts, submitted to audit by an independent auditor and published in accordance with relevant legislation.

  For the financial year 1999-2000, the Post Office has complied with the requirements of the Directive to produce accounts which distinguish between each of its services. These accounts are available to the regulatory authorities but are not for publication. The Post Office also published audited accounts in full compliance with national accounting requirements.

  In order to fulfil the requirements of the Directive, the Postal Services Commission is expected, under the terms of any licence it grants to operate in the reserved area, to require copies of the licensees' management accounts to be delivered to it at regular intervals.

  The published accounts of the Post Office company, to which the property rights and liabilities of the existing Post Office Corporation are expected to be transferred under section 62 of the Postal Services Act 2000, will have to comply with the requirements of the Companies Act 1985 (as amended).

Horizon Project for Automated Payment of Benefits through Post Offices, Eleventh Report of 1998-99, HC 530: Government Response, First Special Report of 1999-2000, HC 50

  1.  The inquiry followed the May 1999 announcement of the abandonment of the Benefits Agency Scheme for paying benefits through a Benefits Payment Card exclusively usable at post offices, constituting a grave threat to Post Office income. The Committee heard oral evidence in June and July 1999 and reported in September 1999.

  2.  The Committee did not fault Ministers for their decision. The Report raised a number of related issues, many of which—such as the suitability of the Horizon automated platform for branch banking business on-line, the rate of roll-out of the programme, the future of the Counters network, the move to benefit payment by ACT, and the future of contracts with Government departments and agencies—have been revisited in written and oral evidence in July 2000, on which the Committee reported in November 2000.

  3.  The Government Reply received in November 1999 welcomed the Committee's conclusions, with some reservations where criticisms of departments or agencies was concerned.

The 1999 Post Office White Paper, Twelfth Report of 1998-99, HC 94: Government Response, First Special Report of 1999-2000, HC 50

  1.  The inquiry into the July 1999 White Paper followed the Committee's January 1998 Report and its December 1998 Special Report which had set out its requirements as to the points to be addressed in the White Paper. Having heard oral evidence in July 1999, it reported in September 1999. The Committee gave a broad welcome to the White Paper.

  2.  The Government's response, received in November 1999, referred to "the helpful reports made by the Committee during the course of the review, which have helped in the development of the Government's policy."

  3.  Many of the conclusions and recommendations were in effect accepted and incorporated in the Postal Services Act, including the extension of the undertakings on sale or exchange of equity to cover Post Office subsidiaries. The Order reducing the monopoly threshold for mail from £1 to 50p was revoked, in line with the Committee's recommendations, awaiting the views of the new regulator. The announcement on 24 October 1999 of a study by the PIU into the Post Office network followed the Committee's conclusion that the network might, as a national asset, require "an appropriate level of national financial support."

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Prepared 18 January 2001